Humana has announced it will be cutting 1,300 jobs, offering early retirement for 1,150 employees and selling its long-term care insurance business, KMG America Corporation, at a $400 million loss.

KMG was acquired by Humana in 2007 for $187.7 million and currently serves more than 30,000 policyholders in a “closed block of non-strategic commercial long-term care insurance policies.” It will be sold to Texas-based Continental General Insurance Company and the transaction is expected to close by the third quarter of 2018.

On the same day the sale was announced, the company also told employees it would be reducing its workforce by around 3 percent, or 1,300 jobs. This was in addition to the 1,150 workers who took up Humana’s offer for an early retirement package. Those being laid off will be encouraged to apply for one of the more than 1,450 open positions at the company.

According to the Louisville Courier-Journal, the reason for the cutbacks is Humana’s exit from the Affordable Care Act (ACA) exchanges and the individual market in 2018. It became the first major insurer to make a complete exit from those markets, after scaling back its 2017 participation to 156 counties in 11 states, blaming “further signs of an unbalanced risk pool” on the exchanges.

Earnings, however, had remained strong despite its ACA presence, with its second quarter 2017 income climbing to $650 million. I

Humana is seeking to recover close to that amount in damages from the federal government in a recently filed lawsuit over the ACA’s risk corridor program. Like other insurers, Humana said the government breached its contractual agreements by not making full risk corridor payments, which were supposed to limit excessive losses from insurers in the first years of the ACA by redistributing profits from more successful insurers above a certain threshold.

CMS, however, didn’t say until after insurers signed up to offer exchange coverage that the program would have to be budget neutral. When too few insurers made enough money to cover what others’ losses, the agency only paid out 12.6 percent of what insurers requested for 2014, the first year the exchanges were open.

Humana’s lawsuit said if insurers had known about the budget neutral provision, many would have decline to participate. Its seeking damages of $611 million—above the $591 million in owed payments the company wrote off in Dec. 2016.

Other insurers have tried taking HHS to court over risk corridor payments. In two suits—one from Illinois nonprofit Land of Lincoln Health and another from Blue Cross and Blue Shield of North Carolina—a federal judge tossed the cases. Two other insurers, Moda Health of Oregon and Molina Healthcare of Long Beach, California, have won initial rulings in their favor.

If HHS were compelled to pay the full amount insurers had requested under the risk corridor program in 2014, the total payout would be $2.8 billion.